5. Develop Your Customers' Trust
In recent research the most important trait by far with customers (and employees) is trusting the person they are working with. Some surveys rate trust as high as 80% as the most important factor. To retain clients you have to deal honestly and fairly at all times. It is impossible to place a high enough value on trust and honesty in customer retention.
6. Price Sensitivity Is Back
In this recent economy you might have found yourself in a position where a longtime client has left you for a much lower price. This should not surprise you. Most contractors raise prices gradually over time to compensate for higher labor and material costs as well as to make more profit. Isn't it funny that you will quote a new prospect that you have never done business with a very sharp price to get their business while your bread-and-butter clients pay substantially more? If a longtime client leaves you for a lower price but does not receive the high-quality product and service you provided then you have a chance to get them back. If the competition is on par or even better than your company then getting a customer back can be very challenging.
Spend time listening to what your current customers really want. Ask if they are willing to sacrifice something in the application process since they expect you to lower your price. Attempt to openly discuss their budget allocations and how you can meet them. If your best clients are price shopping ask to analyze the competitions' proposals - the buyer can blackout the prices to allow you to compare the scope of work.
7. Build Your Customer Relationships
Customer retention requires relationship building. This means more than just interacting with prospects and clients when there is work to be done. Many of my clients, for example, are also my personal friends. Over the years we have found things of common interest and care about each other and our families. Perhaps we would not have developed the friendships if it wasn't for the business interactions, and in many cases the business aspect is now just a side benefit. Remember, people like to do business with people they trust … and like.
8. Provide Quality and Service …"Plus One"
Earlier in this article I mentioned a term "Raving Fan" which I borrowed from the book of the same name. There are several steps to creating "Raving Fans," and one is you have to focus on what you are really good at and do it well every day. You then must offer that quality and service "plus one." This means you are always striving for improvement and going at least one-step beyond customer expectations. This might require you to look at the services you provide, to look at each job as a challenge, and perhaps to find a way to create additional worth, maybe by "value engineering" a scope of work different from what the customer was looking for.
Let me give you an example: Suppose your client is seeking bids on a patching project that is 12,000 sq. ft. of 4-in. remove-and-replace by saw cutting damaged areas and replacing asphalt in two lifts. The total area consists of 25 repairs that average 500 sq. ft. You are not sure the depth of the existing asphalt because there has been at least one overlay done since the original installation.
To save time and insure you meet the depth requirement you might explain to the client that milling the areas is a good alternative. If the R & R areas come out at 3 in. you will need to excavate an additional inch to meet spec. On the other hand if the R & R comes out to a depth of over 5 in. then you will either need to add stone (an extra step) or additional asphalt (an extra cost). Just an additional inch over 12,000 sq. ft. would require an additional 74 tons. Multiply this by your average cost of hot mix and you can see that you will either make much less profit if you bid for exactly 4 in. or you will be priced too high if you try and compensate for possible extra mix. Value engineering the project to 4 in. mill and replace helps both you and the end user make sure they are getting the right amount of mix for the right price.
This type of "out of the box" suggestion will make you appear smarter while keeping everyone's best interests in mind. When customers see you putting yourself in their shoes it creates a teamwork atmosphere. And isn't that what your overall goal is, creating a teamwork and partnership approach with good clients?